Change ‘unfair’ pension formula, lawmakers tell government

Dar es Salaam. Members of Parliament on Wednesday faulted the new pension formula, saying it ignores workers’ expectations and subjects them to stressful lives, thus adversely affecting their efficiency.

The legislators spoke in Parliament when debating the Sh10.1 trillion budget for the President’s Office, Regional Administration and Local Government (PO-RALG), docket for the 2024/25 financial year.

Delivering his budget speech on Tuesday, PO-RALG minister Mohammed Mchengerwa said Sh6.71 trillion will be set aside for recurrent expenditure, while the remaining Sh3.415 trillion will be channelled towards development projects.

“Of the Sh3.41 trillion budgeted for development expenditure, Sh2.26 trillion will be sourced internally, while the remaining Sh1.15 trillion will come from outside sources,” he told Parliament.

Debating the budget on Wednesday, Dr Pius Chaya (Manyoni East-CCM) said the idea of changing the 50/50 percent pension formula to 67/33 percent was good.

Read: 28 percent of Tanzanian adults 'have no retirement strategy'

However, he added that the decision was passed without thorough research and therefore ignoring workers’ expectations.

“All problems that exist today are a result of ignoring people’s expectations. They have set expectations that upon retirement they will receive 50 percent of, let’s say, Sh100 million.

“However, all of a sudden, they are told that they will receive 33 percent of the anticipated amount. How are we going to manage citizens’ expectations?” Dr Chaya queried.

He challenged the government to review the pension formula, calling for the reinstatement of the 50/50 calculation, saying the 17 percent difference was insignificant to the government.

Dr Chaya said the sensitivity of the subject had prompted CCM secretary-general Emmanuel Nchimbi to ask the government to come up with plans for motivating public servants.

“Let’s go back to the drawing board, carry out comprehensive research and come up with the best method of helping retirees meet their expectations,” he added.

Ms Rehema Migilla (Ulyankulu-CCM) said the new pension formula subjects public servants, especially teachers, to unnecessary stress and anxiety, which impact on their productivity.

“Does the money belong to employees or someone else? If the money is deducted from workers’ salaries, why are we imposing conditions that they be paid 33 percent upon retirement with the remainder being disbursed in instalments?” she asked.

“If it comes from employees’ contributions, then why shouldn’t pensioners be paid in a lump sum?”

According to Ms Migilla, some employees fail to build decent houses while still in employment, hoping to do so after retiring, only to be frustrated after being paid “pittance” of what they had saved.

“Why shouldn’t they receive full payment? Workers are so stressed that they fail to efficiently discharge their duties. Worse still, you have refused to reinstate withdrawal benefits.

“Due to the absence of withdrawal benefits, workers should be allowed to freely withdraw their contributions as is the case with MPs instead of leaving them to die without collecting their benefits,” Ms Migilla said.

The lawmaker added that the issue should be reviewed to end anxiety among public servants.

Mr Joseph Kasheku (Geita Rural-CCM) said some decisions passed by Parliament are taken for granted despite hurting Tanzanians.

“We are building a nation of thieves because they complain every day about this pension payment formula. Paying someone 30 percent of their savings and withholding the remaining 70 percent simply is not right.

“It means that if one’s savings are, say, Sh100 million, they will only be paid Sh30 million upon retirement. Such a person can easily turn into a thief to ensure that they have enough upon retirement,” he said.

Mr Kasheku added that despite CCM secretary-general Emmanuel Nchimbi saying the issue should not be a daily outcry, Parliament has turned a deaf ear.

“Ministers and the government in general should sit down and contemplate the matter and see if we can reinstate the 50/50 percent formula or come up with a better alternative,” he said.

“We can’t keep talking about the same issue for two or three years while Tanzanians are crying. We should take action to restore workers’ trust and happiness.”

Mr Mohamed Monni (Chemba-CCM) said it is difficult to live with people who are constantly complaining and yet they are expected to assist in discharging government duties.

Meanwhile, lawmakers commended the Tanzania Rural and Urban Roads Agency (Tarura) for its work.

They asked the government to assist councils in disbursing funds for emergencies to restore disrupted infrastructure due to floods caused by prevailing rainfall.

Read: You will only take home 33 percent in new pension scheme from July

MPs also challenged the PO-RALG to address the shortage of primary and secondary school teachers as well as healthcare workers to meaningfully translate the massive infrastructure development made in the two sectors.

In the 2024/25 fiscal year, Sh841.19 billion would be spent on the construction, maintenance, and rehabilitation of road infrastructure and transportation in both rural and urban areas, as well as Sh12 billion for civic polls slated for later this year.